Understanding
AB 60: An In Depth Look at the Provisions of the “Eight Hour Day Restoration
and Workplace Flexibility Act of 1999"

This Memo was drafted
prior to the IWC's adoption of the Interim Wage Order,and as such, this Memo
does not purport to interpret the Interim Wage Order. To the extent that any
provisions of the Interim Wage Order may be inconsistent with this Memo, the
Wage Order provisions would prevail.

AB 60, which was enacted
by the Legislature and signed by Governor Davis earlier this year, will take
effect on January 1, 2000. It is therefore critically important that all DLSE
professional staff take some time to learn about the provisions of this law,
and to understand some of the questions that will arise in its interpretation
and enforcement. This memo will summarize each section of the bill, with a
focus on whether and how it changes existing law.We will also discuss commonly asked questions about AB 60, and by summarizing
from recently issued or pending opinion letters, provide the answers to these
questions.

AB 60 ---- An Introduction to the Substantive Provisions

The Legislature
named AB 60 the “Eight Hour Day Restoration and Workplace Flexibility Act
of 1999. That name tells us the two primary purposes behind the legislation
--- first, to restore daily overtime in California; that is, to bring back
the general requirement for overtime pay after eight hours of work in a day,
a requirement that the Industrial Welfare Commission (“IWC”) had eliminated
from Wage Orders 1 (manufacturing industry), 4 (professional, technical, clerical,
and mechanical occupations), 5 (public housekeeping industry), 7 (mercantile
industry), and 9 (transportation industry), with the adoption of the 1998
wage orders. Section 21 of AB 60 provides that these 1998 wage orders (1-98,
4-98, 5-98, 7-98, and 9-98) shall be null and void; and that in their place,
the pre-1998 wage orders (1-89, 4-89 as amended in 1993, 5-89 as amended in
1993, 7-80, and 9-90, are reinstated from January 1, 2000 until no later than
July 1, 2000, at which point the IWC is required, pursuant to section 11 of
the bill (which adds section 517 to the Labor Code) to adopt new wage orders.It is very important to understand,
however, that although only 5 of the 15 IWC wage orders that are currently
in effect will become null and void on January 1, 2000, AB 60 as a whole applies
to all California workers except for those who are expressly exempted by the
bill itself, or those who were expressly exempted from a pre-1998 wage order.-
Section 9 of AB 60 adds section 515 to the Labor Code, which provides, at
subsection (b)(2), that except for AB 60's new test for the administrative,
executive and professional exemption found at section 515(a), “nothing in
this section requires [the IWC] to alter any exemption from provisions regulating
hours of work that was contained in any valid wage order in effect in 1997,” and
that “except as otherwise provided in [AB 60], the [IWC] may review, retain
or eliminate any exemption from provisions regulating hours of work that was
contained in any valid wage order in effect in 1997.”

With these general principles in mind, we can answer the most
commonly asked questions about AB 60 coverage.13 of the pre-1998 wage orders expressly exempt public employees
from their coverage.These public
employees, who would otherwise be covered by a wage order but for the exemption
“contained in” the wage order, are therefore exempt from AB 60.Likewise, truck drivers whose hours of service
are regulated by the United States Department of Transportation (under 49
C.F.R. §395.1, et seq.) or by the California Highway Patrol or the State Public
Utilities Commission (under 13 C.C.R. §1200, et seq.) are expressly exempt
from the overtime provisions of the pre-1998 IWC orders.These workers are therefore exempted from the
overtime provisions of AB 60.On the
other hand, workers who were not expressly exempted from any pre-1998 wage
order, such as on-site construction, drilling, mining and logging employees,
are covered by AB 60.We should note,
however, that Labor Code §515(b)(1) provides that until January 1, 2005, the
IWC may establish additional exemptions from the overtime provisions of AB
60.Thus, employees engaged in on-site
construction, drilling, mining and logging will be covered by AB 60 unless
and until the IWC chooses to expressly exempt any of them from its provisions.

The statutory provisions of AB 60, or any other state law,
will prevail over any inconsistent provision in the pre-1998 wage orders.For example, the current $5.75 an hour state
minimum wage, which was established by the electorate with the passage of
the Living Wage Act of 1996, now codified at Labor Code section 1182.11, prevails
over the lower minimum wage rates contained in the pre-1998 wage orders.Likewise, AB 60's salary basis test, which
requires a monthly salary equivalent of at least twice the minimum wage, currently
$1,993.33 per month, as a prerequisite for the administrative, executive and
professional exemptions from overtime, prevails over the remuneration test
(and lower monthly amounts) for the administrative and executive exemptions
in the pre-1998 wage orders.Therefore,
starting on January 1, 2000, employers must comply with the pre-1998 wage
orders, to the extent they are not inconsistent
with AB 60 or any other controlling statutes, in which case the requirements
of the statute will apply.

The second important purpose behind AB 60 is the intent toprovide more options for work schedule flexibility than had been available
in the pre-1998 wage orders.AB 60 maintains, with some changes, two of
the mechanisms under the pre-1998 wage orders which permitted work schedules
of more than eight hours per day without payment of daily overtime - - namely,
the provisions for secret ballot elections to implement an “alternative workweek
schedule,” and the collective bargaining agreement opt-out provision.In addition to these mechanisms, there are
two new provisions in AB 60 that permit individual employees to work more
than eight hours in a day (but not more than the alternative number of hours
-- either ten or eleven -- permitted by the statute), at the employee’s request
and under clearly specified conditions, without payment of overtime.The first of these new provisions allows for
individual “make-up time” under which an employee can take time off for personal
reasons and during the same workweek, make up that time by working up to eleven
hours in a day without the payment of overtime.The second of these new provisions allows individual
employees who were working on July 1, 1999 under a schedule that provided
for up to 10 hours in a day to continue working this schedule without payment
of daily overtime, even if this schedule was not established by an alternative
workweek election.We will return
to these flexible work schedule arrangements later in this memo.For now, we will simply note that although
AB 60 allows for increased flexibility in work schedules, the statute imposes
limits on the total hours that can be worked in a day under most flexible
arrangements, and sets out strict procedures that must be followed in order
to work more than eight hours in a day without the payment of daily overtime.

Finally, before embarking on a detailed review of AB 60, we
should note that for DLSE, in its function as an enforcement agency, perhaps
the most important change brought about by this new law is creation of a new
method for enforcing overtime obligations.Under section 14 of the bill, section 558 is added to the Labor Code,
under which the DLSE may issue a civil penalty citation to an employer that
violates the provisions of AB 60 or any provision regulating hours and days
of work in any IWC order.These penalties
are set at the amount of $50 for an initial violation (or $100 for any subsequent
violation) per underpaid employee for each pay period in which the employee
was underpaid.In addition, the civil
penalty citation may include the amount owed to employees for underpaid overtime
wages.

A Section by Section Look at AB 60

Definitions: Section 3 of AB 60 adds section 500 to the Labor
Code, defining certain words that are used in the statute.The word “workday” is defined as “any consecutive
24 hour period commencing at the same time each calendar day.”The word “workweek” is defined as “any seven
consecutive days, starting with the same calendar day each week,” and as “a
fixed and regularly recurring period of 168 hours” made up of “seven consecutive
24-hour periods.”Finally, the term
“alternative workweek schedule” is defined as “any regularly scheduled workweek
requiring an employee to work more than eight hours in a 24-hour period.”These definitions are unchanged from the pre-1998 wage orders.An employer may designate the period of the workday and the workweek.Absent pre-designation by the employer, DLSE will treat each workday
as starting at midnight, and each workweek as starting at midnight on Sunday,
so that Sunday is the first day of the workweek and Saturday the last.

The Basic Overtime Law: Section 4 of AB 60 amends Labor Code
§510, to set out California’s new basic overtime law.First, it requires overtime compensation at the rate of no less
than one and one-half the employee’s regular rate of pay for all hours worked
in excess of eight in one workday, and for all hours worked in excess of 40
in one workweek, and for “the first eight hours worked on the seventh day
of work in any one workweek”.Second,
it requires overtime compensation at the rate of double the employee’s regular
rate of pay for all hours worked in excess of 12 hours in one day, and “for
any work in excess of eight hours on any seventh day of a workweek.”

This basic overtime law is the heart of AB 60.It restores daily overtime, and takes the basic
overtime provisions found in almost all of the pre-1998 wage orders - - time
and a half for all hours worked in a workday in excess of 8 and up to 12;
double time for all hours worked in a workday in excess of 12; time and a
half for all hours worked in excess of 40 in a workweek; and seventh day premium
pay - - and enshrines these provisions as statutory requirements.

We have received many inquiries concerning the provision for
seventh day premium pay.The time
and a half provision reads slightly differently than the double time provision:
time and a half for “the first eight hours worked on the seventh day of work in any one workweek,” and double time for “any
work in excess of eight hours on any seventh
day of a workweek.”This raises
the question whether AB 60 requires double time for any work performed in
excess of eight hours on the seventh day of the workweek, even if the employee
has not worked all seven days of that workweek.We do not believe this would be a logical reading of the statute; rather,
both the time and a half and double time provisions for seventh day premium
pay must be harmonized to require that the employee work all seven days of
the workweek in order to qualify for this type of premium pay.The purpose of seventh day premium pay is to
provide extra compensation to workers who are denied the opportunity to have
a day off during the workweek; not to reward someone who may only be scheduled
to work one day a week for having fortuitously been scheduled to work on what
is the seventh day of the employer’s workweek.This reading of AB 60 is consistent with the provisions for seventh
day premium pay contained in the pre-1998 wage orders, and we are unable to
discern any intent on the part of the Legislature to modify those provisions.

Example: An employer has no pre-designated
workweek.An employee of that employer
works the following schedule: Sunday-off; Monday-off; Tuesday-8 hours; Wednesday-8
hours; Thursday-8 hours; Friday-8 hours; Saturday-8 hours; Sunday-8 hours;
Monday-8 hours; Tuesday-8 hours; Wednesday-8 hours; Thursday-8 hours; Friday-off;
Saturday-off.Is the employee entitled
to any overtime pay or seventh day premium pay?Answer-NO.There is no daily overtime, because the employee never worked more
than eight hours in a day.There is
no weekly overtime, because the employee did not work more than 40 hours during
each of the two workweeks (running from Sunday to Saturday).And even though the employee worked ten days
in a row, there is no seventh day premium pay, because the employee did not
work seven consecutive days in any one workweek.

The statute also provides that “nothing in this section requires
an employer to combine more than one rate of overtime compensation in order
to calculate the amount to be paid to an employee for any hour of overtime
work.”This is consistent with DLSE’s
enforcement of the pre-1998 wage orders.It simply means that there is no “pyramiding” of separate forms
of overtime pay for the same hours worked.Once an hour is counted as an overtime hour under some form of overtime,
it cannot be counted as an hour worked for the purpose of another form of
overtime.When an employee works ten
hours in one day, the two daily overtime hours cannot also be counted as hours
worked for the purpose of weekly overtime.

Example: An employee works 12 hours on
Monday, Tuesday, Wednesday, and Thursday.How many non-overtime and overtime hours did the employee work that
week?Answer--The employee is credited with 4 hours of daily
overtime each day worked, for a total of 16 daily overtime hours, and these
daily overtime hours cannot be counted for the purpose of determiningwhen to start paying time and a half for hours
worked in excess of 40 in a week.Because
pyramiding is not allowed, there are no weekly overtime hours, even though
the employee worked 48 total hours during the workweek.Only 32 of these hours were regular, non-daily
overtime hours, and they are the only hours that count towards weekly overtime
computations.

Labor Code §510 provides for certain exceptions from the basic
overtime law.The overtime requirements
of section 510 do not apply to an employee working pursuant to:

3. an alternative workweek schedule for
any person employed in an agricultural occupation, as defined in IWC Order
14.(Section 9 of AB 60 amends section
554 of the Labor Code to exclude persons employed in agricultural occupations
from all of AB 60, except for section 558, the section that sets out civil
penalties for violations of the overtime provisions contained in AB 60 or
in any IWC order.Thus, the basic overtime law, now found at Labor Code §510,
does not apply to workers covered by IWC Order 14.However, an agricultural employer that violates the special overtime
provisions of Order 14 will be subject to a penalty citation just like any
other employer.)

Finally, section 510 retains the existing provision regarding
“ridesharing,” which states that time spent commuting to and from the first place at which an employee’s presence
is required by the employer shall not be considered to be part of a day’s
work, when the employee commutes in a vehicle that is owned, leased or subsidized
by the employer, and is used for the purpose of ridesharing.Of course, once the employee reaches the first
place at which his or her presence is required by the employer, all time spent
subject to the control of the employer (whether or not the employee is then
engaged in physical or mental labor), and all time during which the employee
is suffered or permitted to work, must count as hours worked under the various
IWC orders.

Non-Collectively Bargained Alternative Workweek Schedules:
Section 5 of AB 60 adds section 511 to the Labor Code, which permits certain
non-collectively bargained alternative workweek schedules.Under subsection (a), an employer may propose
a “regularly scheduled alternative workweek” authorizing work by the affected
employees “for no longer than 10 hours per day within a 40-hour workweek”
without payment of overtime compensation.The proposed “regularly scheduled alternative workweek” may be “a
single work schedule that would become the standard schedule” for all of the
workers in the work unit, or “a menu of work schedule options, from which
each employee in the unit would be entitled to choose.”

Whether it is the only work schedule for an entire work unit
or one of several options on a menu available to the workers in the unit,
the “regularly scheduled alternative workweek” must provide for specified
workdays and specified work hours, and these workdays and work hours must
be fixed and regularly recurring.

Adoption of an alternative workweek schedule under section
511(a) requires a secret ballot election with approval by at least two-thirds
of the affected employees.We have
received many inquiries concerning the procedures to be followed in holding
such an election.Section 11 of AB
60 adds section 517 to the Labor Code, which requires the IWC, no later than
July 1, 2000,to adopt wage orders
which must include procedures for conducting elections to establish or repeal
alternative workweek schedules, procedures for implementing such alternative
schedules, the procedures for petitioning to repeal an alternative workweek
schedule, the conditions under which an employer can unilaterally repeal such
a schedule, the contents of any required notices or disclosures to employees,
and the factors in designating a work unit for purposes of an election.Until such new wage orders are adopted by the
IWC, employers must comply with the procedures dealing with alternative workweek
elections that are found in the applicable pre-1998 IWC wage order, to the
extent that those procedures are not inconsistent with AB 60.

Each worker eligible to vote in an election must be informed,
prior to the election, of the precise work schedule-- that is, the precise workdays and work hours -- that he or she
will be assigned to work (or, in the case of an election to establish a “menu
of work schedule options”, allowed to choose from) if the alternative work
schedule is adopted.We have been
asked whether an employer can establish a menu of work schedule options through
an election, and then, if too many or too few workers choose to work one of
the alternative schedules, assign workers to work schedules on some basis
other than the workers’ choice.The
answer to this is no, as the statute clearly provides that “each employee
in the unit would be entitled to choose” among the various work schedule options
on the “menu.”If the employer’s business
needs preclude allowing its employees to freely choose among work schedule
options, the employer should not propose a “menu of work schedule options”.Instead, the employer may be able to propose more than one alternative
work schedule by dividing the workforce into separate work units, and proposing
a different alternative work schedule for each unit, so that each worker knows
exactly what schedule he or she is voting for.

A “regularly scheduled alternative workweek” permitted by section
511(a) cannot provide for regularly
scheduled workdays in excess of 10 hours or regularly scheduled workweeks in excess of 40 hours.Thus,
regularly scheduled workdays for longer than 10 hours (except within the
health care industry, which is discussed below) are not permitted under a
non-collectively bargained alternative workweek schedule, and if an employer
whose employees are working pursuant to an alternative workweek schedule regularly scheduled workdays in excess
of 10 hours, DLSE will conclude that these employees are not working an alternative
workweek schedule permitted under section 511(a), and thus, the employer will
be required to pay overtime compensation for all hours worked in excess of
eight in a day or 40 in a week, as required by section 510.

Example: An employer covered by Wage Order
7, whose employees have voted to adopt a 4/10 alternative workweek schedule
(4 workdays a week, 10 hours per workday, for a total of 40 hours worked each
workweek) pursuant to section 511(a), seeks to have its employees regularly
work 12 hours each workday, and asks whether it can do this by paying two
hours overtime, at time and a half, for the extra two hours each workday.The answer is NO.A regularly scheduled 12 hour workday is not
permitted under section 511(a), so this is not a valid regularly scheduled
alternative workweek.As such, section
510 will apply to require time and a half for all hours worked in excess of
eight in a workday.The employer must
pay time and a half for 4 overtime hours each workday.

However, it is expected that there will be occasions, not regularly recurring, when an employee
working under an alternative workweek schedule adopted pursuant to section
511 will be required to work extra hours beyond those that are regularly scheduled.These occasions are addressed by subsection (b) of section 511, which
provides that an employee working under an alternative workweek schedule adopted
pursuant to subsection (a) shall be paid overtime compensation at the rate
of no less than one and one-half times the employee’s regular rate of pay
for any work in excess of the regularly scheduled hours established by the
alternative workweek agreement and for all hours worked in excess of 40 per
week, and at the rate of no less than double the employee’s regular rate of
pay for all hours worked in excess of 12 hours per day and for any work in
excess of 8 hours on days worked other than workdays that are regularly scheduled
under the alternative workweek.The same prohibition of “pyramiding” different
types of overtime pay, found at section 510, is contained in section 511.

Example: A secret ballot election results
in the adoption of an alternative workweek schedule under which the affected
workers are to work four ten hour days (Monday-Thursday), for a total of 40
hours work each workweek.No overtime
compensation is requiredwhen the
employees work the hours that are authorized by this alternative workweek
schedule.On occasion, the employer
assigns extra work to theseemployees.This extra work is not assigned on a regular
or recurring basis.One workweek,
an employee working under this alternative workweek schedule works the following
hours: Monday-10 hours, Tuesday-12 hours, Wednesday-14 hours, Thursday-10
hours, Friday-10 hours, Saturday-off, Sunday-off.There is no overtime for Monday or Thursday (since the employee
did not work any extra hours, outside his or her regularly scheduled hours,
on those days); the extra two hours worked on Tuesday must be paid at time
and a half; the extra four hours worked on Wednesday are paid at time and
a half for the first two hours and at double time for the next two hours (since
those final two hours were beyond 12 hours in a day); the extra 10 hours worked
on Friday must be paid at time and a half for the first eighthours (since those hours were not regularly
scheduled, as Friday is not a regularly scheduled workday) and at double time
for the final two hours (since these two hours exceeded eight hours on a non-regularly
scheduled workday).

We have been asked whether AB 60 permits alternative workweek
schedules of less than 40 hours per week.Section 511(a) permits the adoption of a regularly scheduled alternative
workweek “that authorizes work by the affected employees for no longer than
10 hours per day within a 40 hour workweek.”The word “within” means any workweek of no more than 40 hours, and
would include workweeks of less than 40 hours.However, paragraph 3(B) of Order 1-89 (manufacturing) contains a unique
provision, not found in any other wage order, that requires an alternative
work schedule to provide for “not more than ten hours per day within a workweek
of not less than 40 hours.”Thus,
employers covered by Order 1-89 are prohibited from establishing an alternative
schedule of less than 40 hours per workweek.All other employers, under AB 60, can establish
alternative schedules that provide for up to 40 hours in a workweek.The IWC, of course, may consider amending the language in Order 1 to
conform to the more liberal provisions of the statute.

We have received many inquiries as to whether AB 60 prohibits
the adoption or retention of a so-called “9/80" alternative work schedule
that does not provide for the payment of overtime.Under a 9/80 schedule, employees will work
9 hours a day from Monday through Thursday, 8 hours on Friday, followed by
a week of 9 hours worked each day on Monday through Thursday, and no hours
worked on Friday.If the employer
has not pre-designated a workday and workweek, the standard midnight to midnight
workday (based on the calendar day) used by DLSE for enforcement purposes
will result in 44 hours worked the first workweek of this schedule, followed
by 36 hours worked the second workweek.And
since a regularly scheduled alternative workweek adopted by a secret ballot
election cannot provide for more than 40 hours regularly scheduled within
a workweek, the fact that every other workweek is regularly scheduled to exceed
40 hours would defeat the alternative workweek, and mandate payment of overtime
for all hours worked in excess of 8 in a day or 40 in a week.But by predesignating the workday to run from
noon to noon, and by predesignating the workweek to run from Friday noon to
next Friday at noon, the employer can establish a 9/80 schedule that does
not exceed 40 hours in a workweek, in that the eight hours worked every other
Friday are split in half, with the 4 hours worked before noon falling into
the first workweek, and the 4 Friday hours worked after noon falling into
the second workweek.

Of course, as with any other alternative workweek schedule
under section 511, the 9/80 schedule cannot be unilaterally imposed by the
employer but must be (or have been) adopted by the requisite two-thirds vote
in a secret ballot election to allow for this schedule without the payment
of daily overtime.

Prohibited Reduction of Regular Rate of Pay:Subsection (c) of section 511 provides that
“an employer shall not reduce an employee’s regular rate of hourly pay as
a result of the adoption, repeal or nullification of an alternative workweek
schedule.”This is a new protection,
that never before existed in the Labor Code or any IWC order.This prohibition only applies to reductions
in the regular rate of pay that are implemented on or after January 1, 2000;
it does not apply to any reduction implemented prior to January 1, 2000.The prohibition applies to repeals resulting
either from an election or from an employer’s unilateral decision, and to
the nullification of any alternative workweek schedule by operation of AB
60.The prohibition would be enforceable by filing
an individual wage claim or a civil action to recover unpaid wages owed to
a worker or group of workers based on the wage rates that were in effect prior
to the unlawful reduction, and through injunctive relief.

Reasonable Accommodation:Under subsection (d), an employer must make a reasonable effort to
find a work schedule of no more than eight hours in a workday to accommodate
any employee who was eligible to vote in the election that established the
alternative workweek schedule, if such employee is unable to work the hours
established by the election.Employers
do not have a duty to make such an effort on behalf of any employee who is
hired after the election was held, except for a duty to explore any available
alternative means of accommodating the religious beliefs of those employees
whose religious observances conflict with an adopted alternative workweek
schedule.However, the statute permits
the employer to provide a work schedule of no more than eight hours in a workday
to any employee who is hired after the adoption of an alternative workweek
schedule if that employee is unable to work the alternative schedule.

Reporting the Results of the Election:Subsection (e) requires the employer to report
the results of any such election (regardless of the outcome of the election)
to the Division of Labor Statistics and Research (DLSR) within 30 days after
the results are final.AB 60 does
not indicate whether the failure to comply with this reporting requirement
could invalidate the result of the election.We would expect the IWC to address this issue in its post-AB 60 regulations.Any employer covered by reinstated Order 1-89 (manufacturing industry)
is subject to an additional requirement, unique to that Order, that no agreement
for an alternative workweek shall be valid until it is filed with DLSE.Thus, employers under Order 1 must report election results to both
DLSR and DLSE, and such employers cannot implement an alternative workweek
schedule without first reporting the election results to DLSE.

Presently Existing Non-Collectively Bargained Alternative Work
Schedules: Subsection (f) of section 511 provides that any presently existing
alternative workweek schedule that was adopted pursuant to IWC Wage Orders
1, 4, 5, 7, or 9 shall be null and void, except for an alternative workweek that meets all of the following conditions:

1. it provides for no more than 10 hours of work in a workday (except for
12 hour workdays that are allowed in the health care industry, as specified
in subsection (g), discussed below).

2. it was adopted by a two-thirds vote of the affected employees
in a secret ballot election.

3. the election was held “pursuant to wage orders of the Industrial Welfare
Commission in effect prior to 1998.

AB 60 thus puts an end to any alternative workweek schedules that were unilaterally
established by employers pursuant to the 1998 wage orders, except for certain
voluntary arrangements as specified in subsection (h) of section 511, discussed
below.Alternative workweek schedules
that were adopted under wage orders that were not amended in 1998 (those that
left daily overtime undisturbed) should meet the prerequisites for a regularly
scheduled alternative workweek under AB 60, so they are not nullified by operation
of statute.These prerequisites are a maximum of ten hours
work in a workday, a maximum of 40 hours in a workweek, adoption by a secret
ballot election with a 2/3 vote of approval by the affected employees, with
the election conducted pursuant to the procedures specified in the applicable
wage order.

We have received many inquiries from employers that unilaterally
adopted an alternative workweek under the 1998 wage orders, and that now wish
to establish alternative workweek schedules that will not be nullified upon
the effective date of AB 60.Of course,
those employers could wait until January 1, 2000, to propose alternative workweek
schedules that may then be adopted by a two-thirds vote in secret ballot elections
conducted pursuant to the procedures specified in the applicable reinstated
pre-1998 wage order.But many employers
would like to establish a “nullification-proof” alternative workweek schedule
in advance of January 1, 2000, so as to allow for a seamless transition.These employers have focused on the requirement that the election have
been held “pursuant to wage orders . . . that were in effect prior to 1998,”
and have asked whether this means that to be valid and not subject to nullification,
the election must:

(1) have been held or be held on a date when the applicable
pre-1998 wage order was or will be in effect (that is, prior to January 1,
1998, or after January 1, 2000), or (2) have been held or be held at any time
until the IWC adopts the post-AB 60 wage orders, including the period until
December 31, 1999 while the 1998 wage orders remain in effect, as long as
the employer complied with the election procedures (including requirements
for employee notification, etc.) contained in the applicable pre-1998 wage
order.We believe that the intent
of AB 60 is best effectuated by construing this ambiguous provision in accordance
with the latter interpretation, so as to allow employers who are presently
subject to a 1998 wage order to conduct an election by following all of the
procedures provided in the applicable pre-1998 wage order.

Finally, turning to those alternative workweek schedules that
will not be nullified by operation of AB 60 on January 1, 2000, subsection
(f) provides that “any type of alternative workweek schedule that is authorized
by this code and that was in effect on January 1, 2000, may be repealed by
the affected employees.”Procedures
for repeal will be contained in the IWC’s post-AB 60 wage orders.Until those orders are adopted, procedures
for repeal are governed by the applicable pre-1998 wage order.Under long-standing DLSE enforcement policy,
an employer that wants to terminate an alternative workweek schedule can do
so unilaterally, without holding a repeal election, after providing reasonable
advance notice to its employees.If
the IWC wishes to prohibit such unilateral repeals, it may do so through its
post-AB 60 regulations.

Two Important Exceptions to Subsection (f) of Labor Code §511:

- - The first exception to subsection (f) is found at subsection(g),
which deals with the health care industry.It provides that an alternative workweek schedule
in the health care industry adopted by a two-thirds vote of affected employees
in a secret ballot election pursuant to Wage Order 4-89 as amended in 1993,
or Wage Order 5-89 as amended in 1993, that provided for workdays exceeding
10 hours but not exceeding 12 hours in a day without the payment of overtime
compensation, shall be valid until July 1, 2000.Of course, if the alternative workweek schedule
adopted pursuant to such an election provided for a workday that does not
exceed 10 hours, it would meet the criteria set out in subsection (f), and
it would therefore remain valid indefinitely.

Several health industry employers have asked whether there
is any possibility, under AB 60, for extending alternative workweek schedules
that provide for 12 hour workdays past July 1, 2000.At present, it would appear that any regularly scheduled non-collectively
bargained alternative workweek in the health care industry that provides for
workdays that exceed 10 hours will be nullified by operation of the statute
following July 1, 2000; and unless the affected employees adopt an alternative
workweek schedule that comports with AB 60's limits and any provisions that
may be adopted by the IWC, the basic overtime requirements of section 510
will apply.

- - The second exception to subsection (f) of Labor Code §511
is found at subsection (h), which permits an individual employee to continue
to work an alternative workweek schedule without the payment of daily overtime
compensation, even if the schedule was established by the employer unilaterally,
without an election, under the 1998 wage orders, if all of the following conditions
exist:

1. the employee was employed
on July 1, 1999, and

2. the employee was then voluntarily working an alternative workweek
schedule, and

3. this schedule did not provide for work in excess of 10 hours of work
in a workday, and

4. this employee makes a written request to the employer to continue
working this schedule, and

5. the employer approves the written request.

Employees hired after July 1, 1999 will not be eligible for
this non-collectively bargained, non-secret ballot approved, individual alternative
workweek schedule.If the employee,
as of July 1, 1999, was working an alternative workweek with regularly scheduled
workdays of more than 10 hours, this option is unavailable, even if the employee
and employer are now willing to limit the workday to 10 hours.A written request to continue working this individual alternative workweek
without payment of daily overtime will only be effective as to work performed
after the date of the request; the employer must pay the applicable daily
overtime compensation for any work performed prior to the date that the written
request is executed and approved.Finally,
because this exception allows for individual voluntary agreements, DLSE has
determined that the employee can, at anytime, revoke his or her written request
to continue working this sort of alternative workweek schedule, in which case
the employer must henceforth pay daily overtime in accordance with the provisions
of AB 60.

Individual “Make-Up Time” and the Flexible Workweek:The most significant new aspect of work time
flexibility is found at section 7 of AB 60, which adds section 513 to the
Labor Code, to provide a mechanism for individual employees to take time off
to attend to their personal needs, and to then make up that time within the same workweek, without the payment
of overtime compensation except for hours worked in excess of 11 in one workday
or 40 in one workweek.The employee
benefits by not losing any pay, or incurring any loss of sick or vacation
time, for the time off; and the employer benefits by not having to pay daily
overtime to the employee who is working more than eight hours (but not more
than 11 hours) in a day in order to make up the missed time.

Make-up time will not count in computing the total number of
hours worked in a day for the purposes of the overtime requirements specified
in section 510 (the basic overtime law) and section 511 (the provisions for
regularly scheduled alternative workweeks) only if the make-up hours are worked
in the same workweek in which the work time was lost.Also, the employer will not have to pay overtime compensation for
the make-up work only to the extent that the employee performing the make-up
work does not exceed 11 hours of work in a workday or 40 hours of work in
a workweek.In other words, when an
employee works more than eight hours in a workday because the employee is
performing make-up work that day, any work performed in excess of 11 hours
that day must be paid at the appropriate overtime rate.Likewise, any work performed in excess of 40 hours during the workweek
must be paid as overtime.

Under section 513, make up time is permitted if the employer
approves the employee’s signed written
request to make up time that has been or that will be lost as a result
of the employee’spersonal needs.The employer
may choose to grant or deny any request to work make up time.A separate written request is needed each time
the employee asks to make up work time pursuant to this section.The request need not be made prior to the employee
taking off the time, but must be made prior to the performance of the make
up work in order to ensure that the employer is not liable for daily overtime
for the make up hours.Any daily overtime
hours worked prior to a request to perform make up work cannot be credited
as make up time, but rather, will constitute time for which overtime compensation
must be paid.And most importantly,
time that is taken off in one workweek can only be made up during that same
workweek; if it is worked in a different workweek than the when it was taken,
the daily overtime hours worked must be paid as overtime.

The statute expressly prohibits employers from “encouraging
or otherwise soliciting an employee to request an employer’s approval to take
personal time off and make up the work hours within the same week pursuant
to this section.”This does not prohibit
employers from merely informing workers of the provisions of this statute;
however, it clearly does prohibit employers from suggesting, recommending
(or certainly, ordering) that workers “request” make up time.

We have been asked whether make-up time can be worked in advance
of the date that the time being made up is lost.There is nothing in the statute that would
prohibit this, so long as the make-up work is performed during the same workweek
in which the time is lost.Thus, if
an employee knows that he or she will need to take time off to attend to personal
needs on the last day of the workweek, the employee can make-up this time
in advance, during the preceding days of that workweek.The question that then follows is: does the
employer have any overtime exposure if that worker, after working the make-up
time, decides not to take the time off, and works the time that he or she
had planned on taking off?The answer
to this would depend on whether the employee ended up working more than 40
hours in that workweek.If so, section
513 requires payment of overtime for all hours worked in excess of 40 in a
workweek.If the employee did not
end up working more than 40 hours that workweek, the employer would not be
liable for any daily overtime (provided that the employee did not work more
than 11 hours in any workday, and that any hours worked in excess of eight
in any one workday were worked as make-up time).The reason the employer would not be liable for any daily overtime
under this scenario is because the employer agreed to allow the employee to
work these extra daily hours without
payment of daily overtime in order to make-up time that the employee asserted
would be lost later in the workweek due to the employee’s personal obligations,
and the employer relied on the employee’s assertion in granting this request.On the other hand, if an employer revokes its
previously granted permission to allow an employee to perform make-up work
after the make-up work is performed, but before the time off is taken, the
employer will be liable for all daily overtime, and the extra daily hours
worked will not be treated as make-up time.

Finally, we have been asked whether these make-up time provisions
apply to employees working under regularly scheduled alternative workweeks.The answer is yes, section 513's make-up time provisions expressly
apply to workers covered by section 510, the basic overtime law, and to workers
covered by section 511, which authorizes alternative workweek schedules.Of course, a worker employed under a valid alternative workweek schedule
which provides for 10 hours of work in a workday without payment of overtime
will only be able to work one extra hour of make-up time during such a workday
before exceeding the 11 hour per day cap that triggers overtime for all subsequent
make-up time worked that day.Because
make-up time applies to workers employed under an alternative workweek schedule,
such workers may perform up to 11 hours of make-up work on a day that they
are not regularly scheduled to work without the payment of overtime compensation
that would otherwise be required, pursuant to section 511(b), for working
on a day other than a regularly scheduled workday.

Examples:An employee scheduled to work an eight hour workday can work an
additional three hours that day as make-up time without the payment of daily
overtime.An employee scheduled to
work a six hour workday can work an additional five hours that day as make-up
time without the payment of daily overtime.An employee scheduled to not work at all on a specific day can work
up to 11 hours of make-up time that day without the payment of overtime, whether
the worker is covered by the basic overtime law or is working under an alternative
workweek schedule pursuant to section 511. On the other hand, an employee
not covered by a regularly scheduled alternative workweek pursuant to section
511, who is nonetheless scheduled to work nine hours in a workday, can work
two hours of make-up time that day without payment of overtime for the make-up
time, but must be paid overtime for the one overtime hour of scheduled, non-
make-up work.If this same employee
works three hours of make-up time, resulting in 12 hours of work that workday,
the employee must be paid two hours of overtime at the rate of one and one-half
times the regular rate (one hour for the ninth hour of scheduled work, and
another hour for the make-up time that exceeded the eleventh hour of work
that day).Finally, if this same employee
works four hours of make-up time, resulting in 13 hours of work that workday,
the employee must be paid 2 hours of overtime at time and a half, and one
hour of overtime at twice the regular rate of pay.

The Collective Bargaining Agreement Opt-Out Provision: Section
8 of AB 60 adds section 514 to the Labor Code, which makes AB 60's overtime
and meal period provisions inapplicable to employees who are covered by a
collective bargaining agreement (“CBA”), if the CBA expressly provides for
the wages, hours and working conditions of the employees, and provides a regular
hourly wage rate for those employees of not less than 30 percent more than
the state minimum wage, and “provides premium wage ratesfor all overtime hours worked.” If a CBA
meets these provisions for the opt-out, the workers covered by the CBA are
not entitled to statutory overtime; rather, they will receive premium pay
for all overtime hours worked, as provided by the CBA. This is somewhat different
from prior law, in that the opt-out under the IWC orders had required payment
of a regular rate of at least $1 an hour more than the state minimum wage;
and under the new “30 percent above” formula, the required regular rate would
now be seven dollars and 47 and a half cents ($7.475) per hour.And of course, future increases in the state
minimum wage will automatically result in increases in the regular rate required
for the opt-out. If the opt-out requirements are met, workers are paid for
all hours worked in accordance with the provisions of the CBA.It should be remembered, however, that there
is no CBA opt out under the Fair Labor Standards Act, which requires payment
of overtime at the rate of one and one half the regular rate of pay for all
hours worked in excess of 40 in a workweek.

The term “premium wage rates” are not defined in AB 60 or in
the IWC orders.The term has always
been interpreted to mean any wage rate in excess of the applicable straight
time regular hourly rate of pay.There
is no indication that the Legislature intended this term to be interpreted
in any other manner.Indeed, it would
make no sense to interpret the term as synonymous with a statutory overtime
rate such as one and a half times the regular rate, since the very purpose
of an opt-out provision is to allow for an alternative to the minimum standard
that would otherwise be required by statute.The amount by which the premium exceeds the regular rate is left to
the parties to negotiate; we will recognize any rate higher than the regular
rate as a premium.

We have received several inquiries regarding the meaning, within
section 514, of the term “all overtime hours.”The one thing it cannot mean is all hours worked in excess of eight
in a day without regard to any definition of overtime that might be contained
in the CBA, since such a meaning would prohibit unions from collectively bargaining
for the very same alternative workweek schedules that non-unionized workers
could adopt under AB 60 -- that is, work schedules of up to 10 hours a day
(and 12 hours a day in the health care industry) without the payment of daily
overtime or premium pay.There is
nothing to indicate that the Legislature intended such a peculiar result.The IWC’s post-AB 60 regulations may provide further guidance on the
parameters of the CBA opt-out.

As with any other wage claims that are filed with DLSE by employees
covered by a CBA, any claims for overtime where a CBA is involved must be
reviewed by DLSE Legal in accordance with the consent decree in Livadas v. Bradshaw.

Administrative, Executive and Professional Exemption:Section 9 of AB 60 adds section 515 to the Labor
Code.This is the section that codifies,
with some very significant changes from prior law, the administrative, executive,
and professional exemptions from overtime.First, there are two ways in which AB 60 merely
codifies pre-existing California law.As
was the case under the IWC orders, there is no exemption, no matter how highly
the employee may be paid, unless the employee is “primarily engaged” in exempt
work, and the term “primarily” is defined as more than one-half the employee’s
work time.Thus, state law continues
to differ from federal law, which is less protective of workers; in that under
federal law, the focus is on the employee’s “primary duty,” and an employee
may be found to have a “primary duty” as a manager even if the worker spends
most of his or her work time performing non-exempt tasks.In contrast, state law looks to what the worker
is “engaged in,” that is, what is the worker physically doing.

AB 60 also codifies California’s pre-existing fixed workweek
method for calculating overtime compensation owed to a non-exempt salaried
employee, a method that was approved by the courts 15 years ago in the SkylineHomes case.Under this method,
the salary paid to a non-exempt salaried employee only covers the 40 non-overtime
hours of the workweek; it does not serve to compensate the worker for any
overtime hours worked.This weekly
salary must be divided by 40 to establish a regular hourly rate of pay, which
is then the basis for all overtime calculations.Overtime hours worked are then paid at either
one and one half times the regular rate, or double the regular rate, as required.This contrasts with the less protective federal fluctuating workweek
method, under which a salary paid to a non-exempt employee is deemed to cover
all hours worked (including overtime hours); so the more overtime hours worked,
the lower the regular rate of pay, and so that overtime hours worked are only
paid at one-half the employee’s regular rate of pay.AB 60 does not change the method of computing overtime compensation
for employees who are paid on a commission or piece rate basis; which under
both state and federal law is based on a fluctuating workweek whereby total
weekly commission or piece rate earnings are divided by the total number of
hours (including overtime hours) worked in the week to compute the regular
rate of pay; and overtime hours are then compensated at one-half this regular
rate of pay.

To be sure, AB 60 brings about some very significant changes
in the administrative, executive and professional exemptions.Under prior law, there was no minimum remuneration
or salary requirement for the professional exemption.Under Labor Code section 515, the professional
exemption is subject to the same minimum salary requirement as the administrative
and executive exemption.The so-called
“remuneration” requirement under prior law is now changed to a requirement
of a monthly salary, equivalent to no less than twice the minimum wage for
full time work (defined as employment for 40 hours per week), which would
now require a salary of at least $1,993.33 per month.Since the required salary is set as a multiple
of the minimum wage, future increases in the state minimum wage will result
in corresponding increases in the threshold salary for the exemption.The value of any payments in kind, or other
forms of remuneration (such as employer provided meals or lodging) cannot
be used as a credit against this required minimum salary.The legislative intent in switching from remuneration
to salary was to explicitly adopt the federal salary basis test, to the extent
that it is consistent with California wage and hour law.Thus, employees who are paid on the basis of
an hourly wage, or commissions, or piece rates, cannot be exempt from payment
of overtime under the administrative, executive or professional exemptions.

We have been asked whether a part-time employee working in
a bona fide executive, administrative, or professional capacity (that is,
one who is “primarily engaged” in such exempt work) can be exempt if he or
she is paid a monthly salary that is less than the full-time salary equivalent
of twice the minimum wage, but not less than the applicable percentage of
the minimum monthly required salary, based on the proportion of time that
the part-time employee works in relation to a full time, forty hour week.For example, can an attorney employed by a
law firm on a part-time 20 hour per week basis, be exempt if paid a monthly
salary of $1,000?The answer to that
question is no; we do not believe that this monthly minimum required salary
can be reduced, even if the ostensibly exempt employee is scheduled to work
less than 40 hours per week.An exempt
employee is expected to exercise discretion and independent judgment in order
to decide the number of hours to devote to a particular task, and cannot be
expected to confine his or her work hours to a set schedule, as any such employer-imposed
limitation on hours worked would be inconsistent with the discretion and independent
judgment that is the hallmark of exempt work.Section 515(a)’s requirement of “a monthly
salary equivalent to no less than two times the state minimum wage for full-time
employment,” simply serves to set the amount of the required monthly salary
as a multiple of the minimum wage; and not to permit reductions of this monthly
threshold salary for employees who work less than 40 hours per workweek.

As was the case under the IWC orders, section 515(f) provides
that the professional exemption shall not apply to registered nurses.Another bill that was passed and signed by the Governor this year,
AB 651, provides that the professional exemption shall not apply to pharmacists,
a category of workers who formerly were expressly exempted, under the IWC
orders, as licensed professionals.

AB 60 does not define the duties that characterize exempt work.Section 515(a) gives the IWC the task of “reviewing the duties which
meet the test of the exemption,” and then, if the IWC chooses, it may convene
public hearings to adopt or modify regulations pertaining to these duties.Under the existing IWC orders, the duties are spelled out only in the
broadest terms --- “work which is primarily intellectual, managerial or creative,
and which requires the exercise of discretion and independent judgment.”In enforcing the IWC orders, DLSE has out of necessity come to rely
upon the federal regulations, and federal case law, which define the terms
“executive”, “administrative” and “professional” for purposes of the exemptions,
to the extent that these federal definitions are not inconsistent with state
law.We do not know yet whether the IWC will decide whether to adopt
specific definitions for these terms.Absent
the adoption of such definitions, we will continue to follow existing DLSE
interpretations, as set out in our opinion letters, of these terms.(See, for example, opinion letters dated 1/7/93
and 10/5/98.)

Meal Period Requirements: Section 6 of AB 60 adds section 512
to the Labor Code, which codifies the requirements for meal periods during
the workday.These provisions are
somewhat confusing, and there have been many questions as to whether AB 60
puts an end to “on-duty meal periods.”That
term is used in the IWC orders to describe a meal period during which the
employee is not relieved of all duty regardless of the length of time of the
meal period, or that is less than 30 minutes long regardless of whether the
employee is relieved of all duty.Under
the IWC orders, an “on-duty meal period” is permitted only (1) when the nature
of the work prevents the employee from being relieved of all duty, and (2)
when the employee and employer have entered into a written agreement permitting
an on-duty meal period.An employee
must be paid for the entire on-duty meal period; that is, it constitutes time
worked.

We believe that AB 60 does not prohibit “on-duty meal periods”.Had the Legislature intended to accomplish that, the bill would have
expressly done so.Instead, the term “on-duty meal period” is
not found anywhere in the text of AB 60.Section 512 provides that a meal period of no less than 30 minutes
must be provided to any employee who is employed for a work period of more
than five hours per day.However,
this meal period can be waived by mutual consent of the employee and the employer
if the total daily work period does not exceed six hours.A second meal period of no less than 30 minutes must be provided
to any employee who is employed for a work period of more than 10 hours in
a day, however, this second meal period can be waived by mutual consent if
the worker does not work more than 12 hours that day, and if the first meal
period was not waived.Of course,
since the first meal period cannot be waived if there were more than 6 work
hours in a day, it would seem that no employee working more than 10 hours
in a day could have waived the first meal period.In any event, whenever a worker is employed for more than 12 hours
in a day, the second meal period cannot be waived.

The confusion over whether AB 60 ends “on-duty meal periods”
stems from a misunderstanding of the term “meal period” and the meaning of
the provisions that limit the ability to mutually agree to a waiver of the
meal period.The term “meal period”
includes both the on-duty paid and off-duty unpaid variety.If the prerequisites (as defined in the IWC orders) for an on-duty
meal period are met, then an on-duty meal period may be established.Even though the employee is required to work during the on-duty meal
period, the employee must be given the opportunity, while working if necessary,
to eat his or her meal. That is what cannot be waived, if the work period
exceeds six hours, and if an on-duty meal period has been properly established.
On the other hand, if the prerequisites for an on-duty meal period have not
been met, the limits on waiver of the meal period apply to the employee's
right to take an off-duty meal period.

The IWC will continue to have an important role in defining
meal period requirements, as section 10 of AB 60 adds section 516 to the Labor
Code, which provides that notwithstanding any other provision of law, the
IWC may adopt or amend regulations regarding meal periods, break periods,
and days of rest.

Day of Rest Requirement: AB 60 does not amend existing Labor
Code sections 551 and 552, which provide that every employee is entitled to
one day’s rest in seven, and that no employer shall cause its employees to
work more than six days in seven.

Section 12 of AB 60 makes some minor changes to Labor Code
§554, which, among other things, permits an accumulation of days of rest when
the nature of the employment reasonably requires that the employee work seven
or more consecutive days, providing that in each calendar month the employee
receives days of rest equivalent to one day’s rest in seven.The most significant change to section 554
is that it now specifies that employees covered by IWC Order 14 (agricultural
occupations) are not covered by this chapter of the Labor Code (starting with
Labor Code §500), except for Labor Code section 558, so that employers of
such employees will be subject to civil citations for violations of the overtime
provisions of Order 14.

Section 13 of AB 60 makes some minor changes to Labor Code
§556, which provides that sections 551 and 552, the sections which mandate
one day’s rest in seven, shall not apply to any employer or employee when
the total hours of employment do not exceed 30 hours in a week or six hours
in any one day of that week.We have
been asked whether an employee who works such a part-time schedule would be
entitled to seventh day premium pay, pursuant to section 510.The answer is yes, seventh day premium pay is required under section
510 if the worker works seven consecutive days in a workweek, regardless of
the total number of hours worked during that workweek or during any of the
days during that workweek.Section
556 does not exempt part-time workers from the requirements of seventh day
premium pay.

Enforcement:As discussed
earlier in this memo, section 14 of AB 60 adds section 558 to the Labor Code,
which establishes a civil penalty citation system as a mechanism for enforcing
the overtime provisions of both AB 60 and the IWC orders.The citation
may include: 1) a civil penalty that is payable to the State (set for an initial
violation, which we interpret as a first citation, at $50 per employee per
pay period for which the employee was underpaid; and for a subsequent violation,
at $100 per employee per pay period in which the employee was underpaid),
and 2) an additional amount representing
the unpaid overtime wages owed to the employees, with any such wages that
are recovered to be paid by DLSE to the affected employees.By allowing for inclusion of unpaid wages as a component of the amount
assessed, overtime citations differ from minimum wage civil penalty citations
under Labor Code §1197.1, which do not include an unpaid wage component.This unpaid overtime wage component of the assessment provides DLSE
with a significant enforcement mechanism, and a means of expeditiously pursuing
the collection of unpaid overtime wages.

Employer Appeal Rights:Section
558(b) provides that the procedures for issuing, contesting and enforcing
judgments for civil penalty citations for overtime violations shall be the
same as the procedures governing minimum wage citations under Labor Code §1197.1.Thus, an employer will have 15 business days from the date the citation
is issued to request an appeal hearing.The
hearing must then be held within 30 days of a timely request. The decision
of the Labor Commissioner’s hearing officer, either affirming, dismissing
or modifying the proposed assessment, must be served on the parties within
15 days of the conclusion of the hearing.The employer then has 45 days from the date the decision is served
to file a petition for a writ of administrative mandate.If no writ petition is timely filed, then the Labor Commissioner’s
decision becomes due and payable, and is entered as a clerk’s judgement.If a writ petition is filed, the court will review the administrative
record to determine whether the evidence presented at the hearing before the
Labor Commissioner supports the findings and whether the Labor Commissioner's
decision correctly applies the law.Since court review is by way of writ, rather
than de novo trial, it is critical to present the necessary evidence at the
administrative hearing to establish an adequate administrative record.

Of course, the civil penalty provision of section 558 is not
the only means available to DLSE for enforcing a worker’s right to overtime
compensation.DLSE can still prosecute
overtime violations as it has in the past, by filing a civil action pursuant
to Labor Code §1193.6.DLSE also can,
of course, continue to adjudicate individual employee wage claims through
the section 98 Berman hearing process.

We have received several inquiries as to whether “willfulness”
is a required element for the issuance of a civil penalty for overtime violations.The answer is no, there is no requirement of “willful” underpayments.The word “willful” or “intentional” does not appear in section 558.Had the Legislature intended to make “willfulness” a requirement, they
would have do so expressly, as in Labor Code section 203.It is therefore our conclusion that purported absence of willfulness
is not a defense to the imposition of penalties under section 558.

We have also been asked whether meal period violations will
be subject to civil penalty citations under section 558.At first blush, the statute authorizes the
issuance of a citation for a violation of “a section of this chapter or any
provision regulating hours and days of work in any [IWC] order,” so that violations
of the meal period requirements of section 512 would appear to be subject
to civil penalty citations.But the
manner in which civil penalties are calculated -- $50 or $100 per underpaid employee per pay period in which
the employee was underpaid, plus
the amount of the underpaid wages
-- makes it clear that a violation of meal period requirements will not result
in the imposition of a civil penalty under section 558,unless the meal period violation is coupled with a failure to pay
the employee for the time worked during the unlawfully deprived meal period.In other words, as long as the employee was paid at the appropriate
regular or overtime rate for the time worked during what should have been
his or her meal period, the employer is not subject to a penalty.However, if an employee is not given a meal period as required by section
512, and is not paid for such time worked (either
at the regular rate or at the overtime rate, whatever may be required), a
penalty citation may be issued in accordance with section 558.

We have also received inquiries as to whether penalties will
be assessed against an employer's payroll clerk, payroll supervisor, or a
payroll processing service for failure to issue checks that contain required
overtime compensation.This question
is prompted by the expansive language of section 558, which makes "any
employer or other person acting on behalf of an employer" subject to
a penalty citation.Regardless of
the expansive sweep of this language, DLSE does not intend to issue penalty
citations to any individual persons who do not formulate policies that lead
to non-payment of required overtime compensation.In general, penalties will be issued against the legal entity that
is the employer.To the extent that
DLSE may, on appropriate occasions, decide to go beyond this legal entity
in imposing liability, we would not anticipate going beyond the definition
of employer found in each of the IWC orders.That definition includes any person "who directly or indirectly,
or through an agent or any other person, employs
or exercises control over the wages, hours, or working conditions of any person."Thus, in appropriate instances, corporate officers or managers may
be included as defendants in a penalty citation pursuant to section 558.

Labor Code section 553, which was not amended by AB 60, offers
another method of enforcing AB 60's provisions.Section 553 provides that "any person
who violates this chapter," which now includes the overtime provisions
of AB 60, "is guilty of a misdemeanor."

Special Industries: Existing provisions of the Labor Code contain
special workday or workweek requirements or exemptions relating to employees
of ski establishments (section 1182.2), commercial fishing boats (section
1182.3), licensed hospitals (section 1182.9), and stable employees engaged
in the raising, feeding or training of racehorses (section 1182.10).Sections 16 to 19 of AB 60 amends these statutes to provide for their
repeal effective July 1, 2000, unless the Legislature enacts a statute prior
to that date extending these special provisions.Of course, the IWC may choose to maintain, or modify, the exemptions
for these industries pursuant to Labor Code section 515(b).